according to Nibud, 2022 will be a bleak financial year for people with difficult living conditions. It is a good idea to pay off any debts as quickly as possible, but oddly enough, debt repayment is usually not based on common sense but on unconscious feelings, which often leads to failure. How does that work? according to spokesperson Max Vermeer, Nibud’s gloomy New Year’s forecast this autumn has a number of reasons: “the picture we present is due, among other things, to rising energy prices, groceries and petrol. If you are already struggling financially, these price increases make a big difference.”
and just then it is important to repay debts as quickly as possible. Vermeer: “debts cost money. And the longer you have them, the more expensive they get.”Most people know that debt is a serious business. Yet it turns out that we often make irrational choices when relieving. it is precisely in the case of debt that people automatically fall into emotional choices, without objectively making the smartest or most advantageous choice.”
consumer psychologist Patrick Wessels difficult to remain rational
consumer psychologist Patrick Wessels explains why: “debt has a particularly powerful effect on the brain. It causes stress, which makes it harder to think clearly. In debt in particular, people therefore automatically fall into emotional choices, without objectively making the smartest or cheapest choice.”
a good example of irrational repayment behaviour is the tendency to repay round amounts earlier. “Round numbers have a special attraction for our brain,” Wessels says. “Because of the two times 5 fingers we have, 5 and 10 are very well known numbers. This ensures better availability, accessibility, and that is smoother in our brain. This makes these amounts feel less scary, more familiar and more fun.”
paying off one by one
Wessels: “we also tend to pay off all the debts at once, although it has been proven that this is not the most effective way.”He refers to an experiment in which participants were divided into two groups. They all had to deal with 5 debts of 100 cents, so a total of 500 cents. Half were going to pay off that debt evenly, so divided over all 5 ‘loans’ at the same time. the other half went to pay off the debts one by one. She was then told that they would have to work to pay off the debts. Turned out what? Those who paid off their debts one by one worked on average 15% more and thus paid off their debt more quickly.
” it is wise to pay off small amounts first, because if you succeed, you also get the motivation to be able to pay off larger amounts.”
consumer psychologist Patrick Wessels paying off debts intelligently
but if we are so guided by our Unconscious Mind, How do we make wise choices when paying off debts? Wessels: “you can use this science to tackle it properly. You can control your unconscious preference for round amounts by rounding amounts for yourself, for example by dividing the debt into parts of 100 euros.”
” and by not paying off all debts simultaneously but one by one. It is also wise to pay off small amounts first, because if you succeed, you also get the motivation to be able to pay off larger amounts.”
don’t wait five years
Vermeer thinks that the best step to take is to get help as soon as possible. A knowledgeable person who is not emotionally involved in your finances can easily look at your situation with common sense.
“go to the municipality, which can also refer you to voluntary organisations that can help you to find out how best to relieve. Research has shown that people wait on average five years before asking for help in debt, because they are ashamed, or because they think they can solve it themselves. Then the problems have become so big that it takes much longer to solve them than if you start quickly. You don’t have to wait until the new year to start with New Year’s resolutions”, says Vermeer.
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